How many jobs have been created by Prime Minister Narendra Modi’s ‘Make in India’ campaign?

Make in India is a pitch, which is being marketed by Narendra Modi to the companies around the world to start their manufacturing in India. Apply as student news reporter from your college 

The Make in India initiative was launched by Prime Minister in September 2014 as part of a wider set of nation-building initiatives. Devised to transform India into a global design and manufacturing hub, Make in India was a timely response to a critical situation: by 2013, the much-hyped emerging markets bubble had burst, and India’s growth rate had fallen to its lowest level in a decade. The promise of the BRICS Nations (Brazil, Russia, India, China and South Africa) had faded, and India was tagged as one of the so-called ‘Fragile Five’. Global investors debated whether the world’s largest democracy was a risk or an opportunity. India’s 1.2 billion citizens questioned whether India was too big to succeed or too big to fail. India was on the brink of severe economic failure. follow Elyuxen on facebook

Make in India was launched by Prime Minister against the backdrop of this crisis, and quickly became a rallying cry for India’s innumerable stakeholders and partners. It was a powerful, galvanizing call to action to India’s citizens and business leaders, and an invitation to potential partners and investors around the world. But, Make in India is much more than an inspiring slogan. It represents a comprehensive and unprecedented overhaul of out-dated processes and policies. Most importantly, it represents a complete change of the Government’s mindset – a shift from issuing authority to the business partner, in keeping with Prime Minister’s tenet of ‘Minimum Government, Maximum Governance’.

The Make in India initiative has been built on layers of a collaborative effort. DIPP initiated this process by inviting participation from Union Ministers, Secretaries to the Government of India, state governments, industry leaders, and various knowledge partners. Next, a National Workshop on sector-specific industries in December 2014 brought Secretaries to the Government of India and industry leaders together to debate and formulate an action plan for the next three years, aimed at raising the contribution of the manufacturing sector to 25% of the GDP by 2020. This plan was presented to the Prime Minister, Union Ministers, industry associations and industry leaders by the Secretaries to the Union Government and the Chief Secretary, Maharashtra on behalf of state governments.

These exercises resulted in a roadmap for the single largest manufacturing initiative undertaken by a nation in recent history. They also demonstrated the transformational power of public-private partnership, and have become a hallmark of the Make in India initiative. This collaborative model has also been successfully extended to include India’s global partners, as evidenced by the recent in-depth interactions between India and the United States of America.

Consider the following facts:

  • Services Sector’s contribution to India’s GDP is around 55% while it employs only 20% of the workforce. Manufacturing sector’s contribution to GDP is about 25% and it employs 25% of the country’s workforce. Agricultural sector’s contribution to the GDP is only 20% to the economy but it employs about 55% of the country’s workforce.
  • This is in contrast to the trend in the developed countries and developing countries like china where manufacturing sector contributes around 42–50% to the country’s GDP and employs about 40–50% of the total workforce.
  • This shows that India Couldn’t reap the benefits of industrial revolution.
  • High import bill since India being one of largest consumer markets in the world.

The Industrial Development in India was led by Industrial Policy Resolution 1948 and Industrial Policy 1956, which prescribed industrial development led by Public Sector (simply because the private sector in the country was not capable of launching the large scale industrial projects). This was to be followed by the liberalization of country’s economy which happened only in 1990. India’s economy after liberalization and economic reforms, continued to face several constraints. The constraints were in almost all the sectors of the economy viz. agriculture, industry and manufacturing, Infrastructure, Services etc. .

Policies under Make in India:

Make in India was launched to take care of the chronic problems that lay in the Industry and Manufacturing, Infrastructure and services sector.

These problems included:

  1. Lack of Funds/availability of cheap credit to the Industry.
  2. Difficulty in opening new businesses
  3. Difficulty in compliance with Rules and regulations which was mostly due to multiplicity of laws, agencies implementing them and outdated nature of laws.
  4. Underdeveloped Infrastructure to facilitate business.
  5. Lack of innovation when it comes to Indian products.

The above problems were a major contributor in the fact that despite being a huge markets for consumer goods, and durables, India was a major importer in these domains. The Indian markets are flooded with Chinese goods and goods from other nations such as Japan and USA. This results in the depletion of foreign currency reserves and loss of opportunity to create more jobs and eventually increase India’s GDP.

In order to remove the above problems and bottlenecks and to improve the manufacturing scenario in the country,the current government in September 2014 decided to introduce a series of targeted reforms, under the umbrella term Make In India.

Under the Make In India program the government has taken the following steps(Please note that there no specific schemes under Make In India, all the schemes of GoI aimed at tackling the above problems can be categorized under the Make In India program):

  1. Lack of Funds/ availability of cheap credit:
    1. Amending the SARFAESI Act to facilitate the lending activity,
    2. Establishing the MUDRA bank and Pradhan Mantri MUDRA Yojana which facilitates loans to MSMEs
    3. Credit Guarantee Scheme for SMEs
  2. Easing the FDI norms and opening more sectors to FDI
  3. Insolvency and Bankruptcy Code 2016
  4. Ease of Doing Business
    1. Improved business processes and procedures
    2. Incorporation of a company reduced to 1 day instead of 10 days
    3. Power connection provided within a mandated time frame of 15 days instead of 180 days
    4. No. of documents for exports and imports reduced from 11 to 3
    5. Validity of industrial license extended to 7 years from 3 years
    6. Bankruptcy Code 2015 – New bankruptcy law, providing for simple and time-bound insolvency process to be operational by 2017
    7. Goods and Services Tax – Single tax framework by April 2017
    8. Permanent Residency Status for foreign investors for 10 years
  5. Improving Infrastructure and removing bottlenecks
    1. Developing Industrial corridors
    2. enhancing the roads and railways capacity
    3. Smart Cities
    4. Sagar Mala Project for port-led development
  6. New IPR policy in 2016 which is TRIPS compliant
  7. Moves to make Mumbai and Ahmedabad the Arbitration hubs
  8. New Manufacturing Policy which focuses on simplification on regulatory environment, usage of green technology and practice and focuses on SMEs and Skill development.
  9. All the actions/measures/Policies of the government that are aimed at improving business environment & make India a manufacturing hub.

How does it impact business and the economy??

  • The policies are expected to result in a business environment which gives companies a cost advantage, seamless operations, responsible & transparent governance, assured markets (domestic buying guidelines for certain industries) and a low risk investment opportunity.
  • This in turn, is likely to translate into more companies setting up their facilities in India leading to more jobs, hence increased consumer spending leading to an increased Per Capita Income.
  • Increased Per Capita Income will lead to more demand and hence spruce up economic activity in the country.

Advantages:

  1. Increased GDP
  2. Increased Employment rates
  3. Improvement in Balance of payments (Export oriented manufacturing), Increased Forex reserves.
  4. Improved BoP will result in the currency advantage (which has been a major contributor in the rise of Asian economies – Japan, Korea, china etc.)
  5. Increased soft power (Just like China enjoys now)
  6. Increased competitiveness of Indian businesses and technology transfer.

Disadvantages:

  1. Some may argue that this may come at the cost of neglecting social sector schemes, since we have limited resources.
  2. It defies the concept of comparative advantage, since, Make in India has not identified just one particular sector. It has rather encompassed all the sectors under it.
  3. Just like China has used its economic strength to dominate global geo-politics, a lot of countries may be wary of India doing the same.
  4. India will face adverse reactions from China since India’s economic prosperity will directly challenge China’s dominance in the region (Doklam Issue, Masood Azhar’s Issue in UN, CPEC – although CPEC was launched earlier, it is in response to India’s growing clout in the region)
  5. Rise of crony capitalism.
  6. Increase in the carbon emissions of the country which will create difficulty achieving INDCs for the Climate Change Paris Summit).

Digital India

Right from the day of assuming power, Digital India and Make in India have been two big USPs of Prime Minister Narendra Modi. The first steps were taken with the launch of MyGov.in portal. Only a couple of weeks ago, Narendra Modi launched his mobile app to connect further with the netizens. Over the last one year, several initiatives have been taken for introduction of Information Technology to empower people in areas relating to health, education, labor and employment, commerce etc. Digital India Week has been launched with an aim to impart knowledge to people and to empower themselves through the Digital India Programme of Government of India.

Some remarkable outcomes of ‘Make in India’

The Make in India campaign has been largely been a success. FDI inflows into India jumped 18% to a record $46.4 bn in 2016 despite global fall.

The investment in India’s clean energy sector in 2015 witnessed a 22 percent increase.

The government radically liberalized key sectors like defense manufacturing, civil aviation, pharmaceutical and food processing. India jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index (GRDI). India was rated 15 in the 2015 Global Retail Development Index.

The following companies have invested/are in the process of investing in India since the campaign was first launched:

  • Airbus:
    France-based Airbus group has shown interest in establishing a greenfield helicopter manufacturing facility in Gujarat at an estimated project cost of Rs 2,800 crore. Sources further revealed that Airbus intends to make its own investment of 100 million euros (approximately Rs. 700 crore) for the factory and another 300 million euros (nearly Rs 2,100 crore) is expected to be pumped in by the company’s suppliers and vendors.
  • Japan’s ShinMaywa Industries, the manufacturer of US-2 amphibious aircraft that India is eyeing, is betting big on the ‘Make in India’ initiative and has offered to set up a plant here to cater to international demands.
  • Huwaei:
    Chinese technology company Huawei made a huge investment of US$ 170 million to set up a new Research and Development campus in Bengaluru.
  • Hitachi:
    Hitachi Research & Development Centre in India is offering a fresh impetus to the government’s flagship ‘Make in India’ initiative, leveraging the Bengaluru center for developing newer technologies, redefining the tech landscape, including those related to the Internet of things (IoT).
  • Foxconn:
    Foxconn is reportedly planning to invest around Rs 32,000 crore. A report in The Times of India said that Foxconn has firmed up its plans to push in $5 billion in the country in order to create a parallel manufacturing hub apart from China. The move is directed towards exportation in important markets like Europe and the US.

Reforms that helped India jump up 30 places in world bank’s doing business report 2018

1. DEALING WITH CONSTRUCTION PERMITS

The introduction of online single window has reduced the number of procedures as well as the time required to obtain a construction permit. This streamlined process has contributed significantly to this unprecedented jump in overall rankings.

2. RESOLVING INSOLVENCY

The Insolvency and Bankruptcy Code, 2016—the landmark reform that helps dissolve businesses without much complication—has been an instrumental contribution in building a conducive business climate.

3. GETTING CREDIT

This is one of the three indicators in which India figures among the top 50 economies, registering a rank of 29. This is primarily due to strengthening of legal rights of borrowers and lenders with respect to secured transactions.

4. PROTECTING MINORITY INVESTORS

Now the 4th best country in the world in terms of protecting minority investors, India registered a jump of 9 places from 13th in 2016. The initiatives taken by SEBI include rationalisation of knowing your customer (KYC) norms, increasing the number of arbitration centers and simplifying foreign portfolio investor (FPI) norms for investing in the debt market.

5. GETTING ELECTRICITY

The time required for obtaining an electricity connection has been reduced from 106 days to 46 days. The improved ranking can also be attributed to a reduction in number and duration of power outages.

6. PAYING TAXES

Most tax-related processes have been simplified as well as digitized. India registered the highest improvement across all World Bank Doing Business parameters in Paying Taxes, registering a 53 spot jump from rank 172 to 119.

Make In India will affect the young entrepreneurs in a very positive way. If this program delivers then it will bring an attitudinal change. It will change the perception of the world towards India and at the same time encourage and empower entrepreneurs to Make In India.

So start with an idea and transform it into a product or service and let the framework of Make in India assist you in your endeavor to start up.

The government removed most FDI barriers, but shock (demonetization) and poorly implemented (GST) reforms have caused some foreign investors to feel uncertain about India. The Smart Cities and Skill India initiatives – designed to create modern infrastructure and up-skill the labor pool, respectively, are great ideas but have become social media bait for online trolls.

In a more competitive policy environment, Make in India would likely have been deemed a failure. This government is still struggling with basic industrialization and mass employment when other governments – like China – are developing the technology-driven industry. The now-in-opposition Congress party had set the bar very low by 2014, making Modi’s Make in India platform look like a godsend, but India now needs something more than a good public relations campaign.

 

Author: Elyuxen

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